The Producers 2018: BlueCrest finds success with new well

BlueCrest Alaska Operating LLC planned to drill one well at its Cosmopolitan unit in 2018, and it did. But the well was more ambitious than that description would suggest.

The local subsidiary of the Texas-based independent completed the H-12 well at the offshore Cook Inlet unit and began adding eight laterals starting in late July 2018.

Using a self-described “fish bone” pattern that the company believes is the first of its kind in Alaska, and perhaps beyond, the H-12 well has a “spine” well running along the Hemlock formation with seven “ribs” drilled every 800 feet up through the Hemlock and Starichkof horizons. These ribs drain to the spine well, which then flows back to shore.

BlueCrest received Alaska Oil and Gas Conservation Commission permits in mid-September 2018 to re-drill the existing H-16 well using the fish bone pattern with eight laterals, suggesting that the approach may become standard at the Cosmopolitan unit.

The fifth plan of development for Cosmopolitan was due in early October 2018 but had yet to appear on the Division of Oil and Gas website as The Producers went to print.

BlueCrest hinted at these ambitions in its fourth plan of development for Cosmopolitan, which covered its activities for 2018. The company said it would use the results of the H-16 and the H-14 well, both completed in 2017, to determine its “path forward.”

The company had begun drilling the H-16 well in late November 2016 and completed work on the well in March 2017. The 22,810-foot well reached a target in the Hemlock formation at 7,089 feet and was producing 330 barrels per day by September 2017.

BlueCrest then began drilling the H-14 Lower Lateral in late March 2017 and finished the 23,415-foot well into the Hemlock formation in mid-May 2017. But technical problems involving the liner complicated the well, forcing the company to start three separate sidetrack attempts before finally completing the well at 22,300 feet on Sept. 25, 2017.

At the time BlueCrest submitted its fourth plan of development, in late September 2017, it said it had an AOGCC permit to drill the H-12 well. But the company noted that the drilling permit “will need some revisions as we have changed our completion package.”

The company also said that it planned to apply in late 2017 or early 2018 for permits to drill the H-16 Upper Lateral and H16 Exploratory Lateral. The company described the H-16 Upper Lateral as targeting the Starichkof Zone, which was the location of the initial discovery within the Cosmopolitan field by Pennzoil in 1967. (Phillips confirmed the discovery and also discovered Hemlock oil with the Hansen No. 1 well in 2001.) The company said it wanted to test the Starichkof Zone with one of its next wells at the unit.

BlueCrest also received permission from the state Division of Oil and Gas to form a participating area at the Cosmopolitan unit covering both the Starichkof and Hemlock.

Past and future plans

BlueCrest brought the Cosmopolitan unit into production in early 2016 from an existing well drilled at the unit by former operator (and former partner) Buccaneer Energy Ltd.

Using its custom-built BlueCrest Rig No. 1, BlueCrest launched its own development program in November 2016. The powerful rig was designed to drill directional wells and laterals to offshore targets from an onshore drilling pad near the city of Anchor Point, keeping the company from having to build an offshore platform or contract a jack-up rig.

The wells at Cosmopolitan are ambitious and complex. They generally extend three miles out from the onshore drilling pad, a mile and a half down to the reservoir and an additional mile and a half horizontally through the sands, according to the company.

The original development plan involved drilling five wells starting in early 2017: the H-16 well, the H-14 well and H-14L lateral, and the H-12 well and H-12L lateral. The company intended the five-well program to be the first stage in a full development program that would potentially require 20 wells over a seven-year timeline. The facilities at the Cosmopolitan unit are capable of handling as much as 10,000 barrels per day.

The 38-acre onshore parcel for the Cosmopolitan development project is much larger than the existing pad and facility require and could easily accommodate expansion.

The company briefly suspended drilling operations in early 2017, after the state withheld between $75 million and $100 million in tax credits owed for previous work. The state policy decision forced the privately owned company to raise significant additional funds.

Cosmopolitan is in the early stages of development. The company said it has identified enough potential targets to justify seven years of expansion drilling. A known natural gas deposit overlying the oil reservoirs would likely require a separate development campaign, although those plans have been put on hold while the company focuses on oil.

Productive volumes remain low but are rapidly growing. The unit produced 865 barrels per day in July 2018, up from 801 bpd in June 2018 and 275 bpd in July 2017, according to figures from AOGCC.